Johnson & Johnson’s Pharmaceuticals Segment in 2Q17

Johnson & Johnson’s (JNJ) pharmaceutical segment comprises the cardiovascular, metabolics, immunology, infectious disease, neuroscience, oncology, and pulmonary hypertension franchises.

The cardiovascular and metabolics franchise reported revenue of $1.6 billion in 2Q17, a decrease of ~6.5% from 2Q16. The decline was driven by lower sales of Invokana due to discounts and higher Medicaid utilization, and partially offset by increased sales of Xarelto.

The immunology franchise reported revenue of $3.0 billion in 2Q17, a 2.6% decrease from 2Q16. This figure includes a 1.9% fall in operating revenue, and a 0.7% foreign exchange impact. The decline includes ~$170 million in rebate adjustments in US markets in the prior period and lower sales of Remicade due to competition from biosimilars, and was partially offset by strong sales of Stelara.

The infectious disease franchise, which includes HIV products and hepatitis C products, reported revenue of $792 million in 2Q17, a 4.5% decline from 2Q16. The fall includes a 3.4% decrease in operating revenue, mainly driven by lower sales of hepatitis C products. The decline was partially offset by strong sales of Prezcobix and Odefsey.

The neuroscience franchise, which includes drugs Concerta, Invega Sustenna, and Xeplion, reported revenue of $1.5 billion during 2Q17, an 8.4% decline from 2Q16. The decline was driven by lower sales of Concerta and the divestiture of Noramco, and partially offset by strong sales of Invega Trinza and Xeplion.

The oncology franchise reported revenue of $1.73 billion in 2Q17, 17.2% growth from 2Q16. The growth was driven by strong performance by Darzalex and Imbruvica, and partially offset by lower Zytiga sales.

The pulmonary hypertension franchise was included in Johnson & Johnson’s portfolio as a result of the Actelion acquisition, which was completed in June 2017. To divest company-specific risks, investors could consider the Vanguard Health Care ETF (VHT). which has a 10.3% exposure to Johnson & Johnson (JNJ). VHT also holds 3.6% of its total assets in Amgen (AMGN), 3.3% in Abbvie (ABBV), and 2.4% in Abbott Laboratories (ABT).